oppn parties GDP: Brakes on Economic Recovery?

News Snippets

  • MS Dhoni decides to take a two-month break, will skip West Indies tour but will not retire
  • Phagu Chauhan is the new Governor of Bihar while Ramesh Bais has been appointed as that of Tripura
  • Governors: Anandiben Patel shifted from Madhya Pradesh to Uttar Pradesh and Lalji Tandon from Bihar to Madhya Pradesh
  • Naga talks interlocutor RN Ravi appointed as Governor of Nagaland
  • Noted lawyer Jagdeep Dhankhar appointed as new Governor of West Bengal
  • 84 NDRF teams have been despatched to 23 states to tackle the flood situation
  • Three persons lynched in Bihar after being accused of cattle theft
  • Delhi police seize a consignment of 1500 kgs of heroin and busts a cartel of Afghanistan-Pakistan narcotics dealers with links to the Taliban
  • Supreme Court gives 9 more months to complete the Babri Masjid demolition case trial
  • Priyanka Gandhi not allowed to meet the families of the dead in the Sonabhadra firing, arrested
  • ICC inducts Sachin Tendulkar in [email protected]@@s Hall of Fame
  • Stock markets bleed for the second day. Sensex crashes 560 points
  • S Jaishankar, Minister of External Affairs, says Pakistan should release and repatriate Kulbhushan Jadhav immediately
  • Karnataka Governor Vajubhai Vala asks the Speaker to hold the trust vote latest by 1.30 pm today
  • The Government sends a list of 24 questions to mobile app company that runs video app TikTok seeking answers for anti-national and obscene content carried on the platform
Former Delhi CM and senior Congress leader Sheila Dikshit dies following a cardiac arrest. She was 81
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GDP: Brakes on Economic Recovery?

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
The signs of economic recovery in the first quarter of FY 2018-19 are showing some signs of reversal, although that may be due to temporary factors like rising oil prices and the weakening rupee. GDP grew at 7.1% in the second quarter (July-September) this year, compared to a robust 8.2% in April-June. Agriculture, manufacturing and mining faltered to bring down the figure. The gross value added (GVA) in agriculture, forestry and fishery grew at only 3.8%, down 1.5% from the last quarter. This was mainly because kharif-season foodgrain output grew at a mere 0.6% compared to 1.7% in the last quarter. This situation is not going to improve in a hurry as there has been below-normal rain this monsoon resulting in lower rabi sowing (shortfall is estimated between 8 to 10% till November). That is going to deepen the distress in the farm sector and weaken the demand for goods in the hinterland causing a cascading effect on all sectors. Manufacturing, on the other hand, nearly halved from the last quarter posting an expansion of just 7.4%, down 6.1% from the 13.5% posted in April-June.

The only bright spot is the rock-solid gross fixed capital formation (GFCF) that measures gross net investment in the economy. It grew at 12.5%, up from the 10% registered in the first quarter, and was 32.3% of the GDP. There has also been a revival in the non-food bank credit. These are encouraging signs for the economy as demand for investment is obviously generated by hopes for future demand for consumption. But the government must put a leash on its spending on non-essentials. The figures for fiscal deficit show that it has ballooned to gobble up the entire budget estimates for the full year in the first seven months. Despite assurances by the finance minister, there is no way the government can keep it down to 3.3% of the GDP. General elections next year, along with uncertainties in global trade, means economic management has to be at its best if the economy is to revive.